Va. To Avoid `Extremes' When Divesting

May 26, 1990|By BOB KEMPER Staff Writer

RICHMOND — Virginia will not take the "extreme" route of eliminating its investments in companies with only minor ties to racially segregated south Africa, an aide to Gov. L. Douglas Wilder said Friday.

Robert P. Schultze, the governor's assistant chief of staff, is head of a task force determining how the state should get rid of its stock holdings in companies doing business in South Africa.

Schultze also lowered to $300 million the estimate of how much of the state's investments could be affected. Earlier estimates were that between $400 million and $1 billion in investments, much of it in the state's pension fund, might have to be sold to meet the governor's directive.

Wilder on Friday met with South African law students and compared himself to freed black activist Nelson Mandela, saying both are black lawyers who believe in working within the system.

Noting he experienced discrimination firsthand as he rose out of the segregated South to become the first black to be elected governor in America, Wilder said, "I can appreciate so much where South Africa can go."

Wilder has ordered state agencies and colleges to eliminate investments in companies that are not "substantively free" of business in South Africa. How much that order costs the state depends on how Schultze's task force defines "substantively free."

If the state takes the most extreme position of not investing in companies with even minor ties to South Africa - such as trade or franchising agreements - it could cost millions of dollars more. Schultze said that's not the direction the task force is headed.

"You can certainly expect something less than the extreme position," Schultze said. "But other than that I don't want to comment any further."

Meanwhile Friday, the University of Virginia Board of Visitors voted, with two members dissenting, to sell $14.7 million worth of stocks in companies doing business in South Africa.

The board voted 13-2 to follow a finance committee's recommendation to sell the stock in companies with substantial interest in the racially segregated country.

U.Va. board members said their vote had no relationship to Wilder's order.

Wilder, who has gotten mixed reviews on his May 15 order to divest, met with six South African law students Friday. A spokesman for the group said American divestment is helping pressure the South African government into improving conditions for the majority black population.

"Divestment has worked in South Africa. It has gotten the government to where it is," said Vasu Gounden. "In terms of what Gov. Wilder has done, we can say it has contributed to that."

Gounden and the others already graduated from law school in their native country and are studying in a master's program at Georgetown University in Washington, D.C.

Gounden said divestment does cost some blacks their jobs, as critics of the policy claim, but, overall, divestment pressures all classes and races, eventually forcing the government to change.

"People would lose jobs," he said. "Some people could be affected by divestment in an adverse way. But that's not correct to say black people are adversely affected by divestment so don't encourage divestment.

"It's had a positive effect. It can only have a positive effect in the future."

Nelson Mandela has been freed and the white government is negotiating with blacks, but that was the result of foreign economic pressure that should not be cut off now, said Gounden.

"Easing off that pressure now can only turn us back, not move us forward," he said.